Detroit Short-Term Rental Regulations

[Trevor Ware]

Hello All,

I'm a new, local investor working towards securing my first property in Detroit. My intention is to restore distressed homes in Detroit neighborhoods and add them to my portfolio for the long-term. However, I'm trying to determine which rental strategy I'll be pursuing for my first few deals. Given Detroit's sky-high property tax rate it can be hard to make long-term SFH rentals make sense from a cash-flow perspective.

I'm exploring the possibility of doing Short-Term rentals instead as the increased cash flow potential would allow me to buy and hold a higher-quality property in a better location. However, Detroit's Short-Term Rental regulations are giving me pause. Some of the city regulations include:

-Short-Term Rentals must be the owner's Primary Residence

-Maximum of 90 Rental Days per year

-Maximum group size of 10 guests

All of which are potential non-starters for running a successful AirBnB in the city. 

That being said, there are clearly loads of Airbnb listings within city limits and some of the local real estate investor personalities I follow on socials are active within that space. 

Do any local BH Members have any experience with the short-term rental market in Detroit?

Are the rentals I see on apps like AirBnb simply flying under the radar? Does the city not strictly enforce STR regulations? Are investors using a creative strategy to operate?

This is most likely not the route I'll be going, but I'm curious to hear what other investors thoughts are on the subject.

[Drew Sygit]

@Trevor Ware not aware that City of Detroit has actually passed a STR ordinances.

Here is a link for PROPOSED requirements only:

https://detroitmi.gov/sites/detroitmi.localhost/files/2024-0...

We do recommend you comply with the city's Certificate of Compliance requirements - which recently dropped the lead-based paint inspection requirement.

Regarding property taxes, while Detroit's millage rate is high for rentals (86 mills), the Assessor's Office is usually under assessing many property values:)

Feel free to DM us if you need more assistance.